Navigating Hidden Freight Costs: Taking Control of Unexpected Charges
Blog Post written by Ohad Azgad, CEO of Cinch
Logistics leaders must control costs while maintaining service quality, but hidden freight charges often erode profits due to poor visibility. Cinch analyzed over 7,000 line-item charges from 30+ freight forwarders, brokers, and carriers in FMCG and manufacturing, uncovering three major cost drivers:
The Frequency-Impact Paradox
Frequent charges like fuel surcharges appear in 14.4% of invoices but contribute just 4.2% of hidden costs. In contrast, customs duties—though present in only 5.8% of invoices—account for 52% of hidden costs. Identifying these patterns helps logistics teams focus on impactful cost reductions.
Inconsistent Invoice Terminology
Charge names like “Fuel Surcharge” vs. “Bunker Adjustment Factor” vary between carriers, reducing cost visibility and negotiation leverage. Standardizing terminology improves tracking, clarity, and vendor negotiations.
Hidden Budget Risks: Customs, Duties & On-Carriage Fees
Customs duties account for 46% of hidden costs, while on-carriage fees add 26%, despite appearing in only 4.3% of invoices. These charges are often underestimated during quoting, leading to budget overruns. Proactive management prevents unexpected expenses.
Strategies to Optimize Freight Costs
- Real-Time Data Analytics: Platforms like Cinch provide charge visibility during quoting, improving cost forecasting and negotiation leverage.
- Standardized Terminology: Consistent charge names enhance cost control and tracking.
- Operational Optimization: Regular audits of handling, cargo, and last-mile delivery fees help eliminate unnecessary expenses.
Ohad Azgad is the CEO of Cinch, a platform that empowers logistics leaders by providing real-time spend visibility to prevent profit erosion, reducing manual data entry, and unlocking actionable insights into logistics spend to improve decision making. Cinch seamlessly integrates with existing systems with minimal IT involvement, making it easy for teams to get up and running without disrupting current workflows.
